| Actual | Previous | |
|---|---|---|
| Composite - Level | 48.2 | 48.0 |
| Services - Level | 48.1 | 48.1 |
Highlights
Global economic activity posted a fifth straight month of contraction as output fell and new orders dropped at the fastest pace in over two years amid rising borrowing costs and elevated inflation. Staffing levels rose for the 28th straight month but job creation slowed to a near-standstill pace.
The J.P. Morgan global composite PMI's output index edged up to 48.2 in December from a 29-month low of 48.0 in November but it was below 49.0 seen in October. It remains under the key 50 level, indicating contraction, following 49.6 in September, 49.3 in August, 50.8 and 53.5 in June. The index is well below 54.8 seen in November 2021.
"The latest set of surveys raise hopes that the downturn in global economic activity bottomed out at the end of 2022," J.P. Morgan said."A recovery in confidence levels also offsets some of the weakness in the demand and labor market indexes. Inflationary concerns moderated, as rates of increase in input costs and selling prices eased."
The services sector showed broader-based weakness in all three main categories of activity: business, consumer and financial services. The manufacturing slump was centered on the intermediate gods sector as consumer and investment goods producers both reported mild upturns.
India and Ireland were the only nations to register growth of economic activity in December. Japan recorded stable output while the US, China, the Eurozone, the UK, Brazil, Russia and Australia all saw downturns. The US fell to last-place in the PMI output index league table.
The business activity index for the service sector was unchanged in December after slipping to a 29-month low of 48.1 in November from 49.2 in October. The index had risen to 50.0 in September from 49.3 in August, which was the first contraction since June 2020. The index has drifted lower from 51.1 in July and 53.9 in June and is well below 54.0 seen in February.
Only five out of the 13 nations for which December data were available saw service sector activity rise: Japan, India, Spain, Ireland and Brazil. The US registered the fastest pace of contraction.
Incoming new business also fell at a rate unchanged from November's low, while employment rose at the slowest pace during the current 22-month sequence of job creation. Input cost and output charge inflation both eased further.
Business optimism improved slightly to a three-month high.
Data released this week showed manufacturing activity in the world economy contracted for the fourth straight month in December amid rising borrowing costs and easing but elevated inflation. Production slipped in key economies on slower global demand, new orders fell at the fastest pace in over two years and international trade volumes slumped. The J.P. Morgan global manufacturing PMI edged down to a 30-month low of 48.6 in December from a 29-month low of 48.8 in November, when it dipped from 49.4 in October.
The J.P. Morgan global composite PMI's output index edged up to 48.2 in December from a 29-month low of 48.0 in November but it was below 49.0 seen in October. It remains under the key 50 level, indicating contraction, following 49.6 in September, 49.3 in August, 50.8 and 53.5 in June. The index is well below 54.8 seen in November 2021.
"The latest set of surveys raise hopes that the downturn in global economic activity bottomed out at the end of 2022," J.P. Morgan said."A recovery in confidence levels also offsets some of the weakness in the demand and labor market indexes. Inflationary concerns moderated, as rates of increase in input costs and selling prices eased."
The services sector showed broader-based weakness in all three main categories of activity: business, consumer and financial services. The manufacturing slump was centered on the intermediate gods sector as consumer and investment goods producers both reported mild upturns.
India and Ireland were the only nations to register growth of economic activity in December. Japan recorded stable output while the US, China, the Eurozone, the UK, Brazil, Russia and Australia all saw downturns. The US fell to last-place in the PMI output index league table.
The business activity index for the service sector was unchanged in December after slipping to a 29-month low of 48.1 in November from 49.2 in October. The index had risen to 50.0 in September from 49.3 in August, which was the first contraction since June 2020. The index has drifted lower from 51.1 in July and 53.9 in June and is well below 54.0 seen in February.
Only five out of the 13 nations for which December data were available saw service sector activity rise: Japan, India, Spain, Ireland and Brazil. The US registered the fastest pace of contraction.
Incoming new business also fell at a rate unchanged from November's low, while employment rose at the slowest pace during the current 22-month sequence of job creation. Input cost and output charge inflation both eased further.
Business optimism improved slightly to a three-month high.
Data released this week showed manufacturing activity in the world economy contracted for the fourth straight month in December amid rising borrowing costs and easing but elevated inflation. Production slipped in key economies on slower global demand, new orders fell at the fastest pace in over two years and international trade volumes slumped. The J.P. Morgan global manufacturing PMI edged down to a 30-month low of 48.6 in December from a 29-month low of 48.8 in November, when it dipped from 49.4 in October.
Definition
JP Morgan Global Services PMI gives an overview of the global services sector. It is based on monthly surveys of over 5,500 executives from 15 of the world’s strongest economies, including the U.S., Japan, Germany, France and China which together account for nearly 80 percent of global services sector’s gross value added (GWA). It reflects changes in global output, employment, new business, backlogs and prices. The Global Services PMI is seasonally adjusted at the national level to control for varying seasonal patterns in each country and is produced by J.P. Morgan and Markit in association with ISM and the International Federation of Purchasing and supply Management (IFPSM).
Description
Investors need to keep their fingers on the pulse of the economy because it dictates how various types of investments will perform. The J.P. Morgan Global Services PMI provides advance insight into the global services sector, which gives investors a better understanding of business conditions and valuable information about the economic backdrop of global markets. The stock market likes to see healthy economic growth because that translates to higher corporate profits. The bond market prefers less rapid growth and is extremely sensitive to whether the economy is growing too quickly and causing potential inflationary pressures. The PMI data are also used by many Central Banks to help make interest rate decisions.
The JP Morgan Global Services PMI data give a detailed look at the manufacturing sector, how busy it is and where things are headed. Since the services sector accounts for the lion’s share of GDP of many advanced economies, this report has a big influence on the markets. In addition, its sub-indexes provide a picture of global output, employment, new business, backlogs and prices.
The JP Morgan Global Services PMI data give a detailed look at the manufacturing sector, how busy it is and where things are headed. Since the services sector accounts for the lion’s share of GDP of many advanced economies, this report has a big influence on the markets. In addition, its sub-indexes provide a picture of global output, employment, new business, backlogs and prices.
